The downfall of an empire begins with internal strife. Dr. Lucio Tan’s empire is no different from the dynasties of Imperial China. Trusted advisers are axed by the emperor as advised by his greed mongering administrators. Lucio is no different from these Emperors. He who foments distrust will fall heavily under those who are after his wealth. Dr. Tan’s feud with brother Mariano Tanenglian has earned him the ire of most of the Filipino-Chinese community. Will he choose the path of righteousness?

Friday

QUO VADIS, MARIANO TANENGLIAN?

Amid the stifling summer heat, coffee shops are rife with talk about the ongoing feud between taipan Lucio Tan and his brother, Mariano Tanenglian. The feud centers on the alleged embezzlement of company funds for personal profit by Mariano. He has refuted this claim and many of his supporters are prepared to stand by him. Many of whom will eventually hear his story, will sympathize with him.

The intensity of this feud is such magnitude that it can be triggered the onset of the fall of an empire. Most people believe that the Lucio Tan Group of Companies was founded solely by Lucio Tan. Most, if not all, of his little known biographies credit him with the success of this conglomerate. In truth, this success should be attributed to four individuals, namely: Lucio Tan, Benito Tan (deceased), Atty. Florencio Santos (deceased), and Mariano Tanenglian.

The business started out as a small trading firm in the late 1950s. From there, it expanded to a multinational that includes a chemical manufacturing company, a cigarette manufacturing company, a piggery, a brewery, banks, hotels, airlines, a distillery, and real estate development. It has business interests not only in the Philippines but in Hong Kong, China, Papua New Guinea, Guam, Canada, and the USA as well.

In order for this enterprise to get where it's presently at, it needs the capability of a trusted chief financial officer. For fifty years, Mariano Tanenglian held that position. He worked efficiently, diligently, and honestly for the company, to the point that it can be said that the company could not have attained this success without his contribution and hard work.

With the position of chief financial officer of a huge conglomerate come all the power and perks. Therefore, it is not surprising that in his 50 years of service, Mariano has accumulated such power and has earned the rights to such perks. Lucio Tan has, in the past, publicly acknowledged Mariano's role in the company's achievements. However, it appears that of late, he is beginning to feel threatened by Mariano's control and influence in the company. In addition to this feeling, he is constantly being fed misinformation and half-truths by people close to him who are more interested in empowering themselves by ingratiating themselves with the taipan. It is widely known in the business community that Lucio Tan thrives on intrigues and exploits discontent to his advantage.

Despite his position and power, Mariano Tanenglian has maintained a low-key profile in the business community. He has gained respect and dignity through his sincerity, discipline and industry. Another major issue in this running feud is his loyalty to Lucio Tan's first family. It is no big secret that Lucio Tan has several families. Because of this, succession to the throne of power is of foremost concern. Having been taught by their late mother on the virtue of faithfulness, Mariano has only acknowledged the legitimacy of the first wife, Carmen, and has only recognized Lucio Tan Jr. as the rightful heir. It is also common knowledge that in spite of the acute business sense of the junior, the taipan has not looked upon his son favorably.

As a result, Mariano has earned the ire of Lucio Tan as well as those on the sidelines who have other items in their hidden agenda. He was given the ultimatum of either being exiled abroad with the rest of his immediate family or otherwise, a memo will be issued to security officers of all the companies in the group prohibiting him from entering the companies' premises. In February 2009, he was actually barred from entering the premises of the Allied Bank Building in Ayala where he holds office.

Being at the top is said to be a lonely proposition for one is not surrounded by equals but by underlings who are mostly sycophants, smooth operators, blind adherents, or people who simply have no choice. History is full of chronicles of rulers, kings, and emperors whose empires were brought to ruins by such underlings. A good leader is one who can weed out the charlatans from the ones who are genuinely dedicated.

Fifty years of contribution to the company has been suddenly rendered worthless. Meanwhile, quo vadis, Mariano Tanenglian? Where do you go from here?

Imelda Marcos reportedly would testify as another witness of the Presidential Commission on Good Government (PCGG) to recover the late President's 60% equity in each of Lucio Tan's companies. Ferdinand "Bongbong" Marcos, Jr. previously testified his father told him and his sister, Imee, to familiarize themselves with the operations and management of the companies because they own them.

Lucio Tan's unknown story is he rose to be one of the richest Filipinos according to Forbes because of Marcos' propensity to partner with Chinese Filipino businessmen including the late Ralph Nubla who's probably the most faithful. Marcos' support for Tan might've included multiple duplication and use of internal revenue stamp on tobacco products that enabled Tan to expand Fortune Tobacco Corp. into Asia Brewery and several other big corporations which probably won't happen had Marcos foreseen San Miguel Corporation would one day be run by Danding Cojuangco.

It's common knowledge in the business community that Marcos' help was essential condition to put up large-scale and capital intensive project that needed government financing and tax incentives. It's likewise known the dictator demanded minimum 60% equity in the proponent company whose head had practically no risk but contribute to Imelda's charities or send gifts on her birthday.

Many behest projects were abandoned after a PNB or DBP loan was granted and the borrower like CDCP's Rudy Cuenca ran laughing all the way to deposit the loan proceeds in a foreign bank. To Tan's and other Chinese Filipinos' credit they implemented and managed well their projects to success. The reason according to some coffeeshop wags was after Dewey Dee got millions of pesos of unsecured loans and ran away Marcos warned that anyone who'd do the same should be prepared for every member of his family to be terminated.

Tan's companies couldn't have been exempted from giving 60% equity to FM in every Marcos-supported company. The best thing Tan should do since he still enjoys influence with the powers that be is to negotiate conversion of Marcos equity into non-voting government-owned preferred stock with guaranteed earnings. The longer Tan fights PCGG there's a danger he would lose all and probably go to jail for corporate corruption under US laws enforcing the UNCAC.

Paper trails when examined by the US Securities and Exchange Commission's inventory system would show that Tan couldn't have legally and statistically raised the funds for the expansions and acquisitions of his family-owned or controlled corporations (FOCCs) to date. This goes for Henry Sy, John Gokongwei and others.

The only explanation is the funds came from the proceeds of corruption defined by FBI as 'income of illegal origin, concealed, disguised, or made to appear legitimate (which is the main objective); and to evade detection, prosecution, seizure, and taxation' and therefore actionable under US laws that pulled the rug under the feet of America's CEOs and foreign officials, e.g. former Ukrainian PM Pavel Lazarenko, now in US jail.

Under post-Marcos administrations Tan has added the Philippine Airlines (PAL) whose profits are siphoned off by his FOCCs. Tan's restaurant has sole catering rights for PAL passengers while another Tan's FOCC leases or purchases planes then leases them to PAL at exorbitant prices.

Tan also acquired the Philippine National Bank which with its merger with Allied Banking Corporation, a product of the Marcos-Tan partnership, would have combined resources making the resulting entity one of the biggest banks in the country.

The corporate corruption perpetrated by Tan and his ilk would make imprisoned American CEOs die of envy such as Worldcom's Bernard Ebbers, Tyco's Dennis Kozlowski, Adelphia's John Rigas, Enron's Jeff Skilling, etc. because their Philippine counterparts have been untouchable to date.

But not for long, thanks to the UNCAC and US laws enforcing it. Pamusa has written Tan and others to step up and negotiate settlement which would be submitted for US court approval; afterwards the records will be sealed from the public and can't be used for future legal action.

Of course, there should be accurate accounting of illicit assets for settlement and which portion would be retained by an offender. This is probably very difficult to accept for Tan and others having enjoyed the powers and perks given them by the media and business community.

They should be assured, though, that US court approved settlements took cognizance of asset-growth that wouldn't have been possible without, say, Tan's business acumen and management skills. These variables can be quantified and credited to Tan and Pamusa would be fair in this regard.

On Pamusa's part we ask for still negotiable amount granted to a whistleblower under US law to enable us to bring to justice the nefariously corrupt such as smugglers, drug traffickers, jueteng lords, gun-for-hire syndicates and organized criminals that can't be defeated as long as they see public and corporate corruption going on everyday and can bribe their way out of dirty policemen and law enforcers.

Tan and his ilk have to hurry up. The reaction from President Arroyo's staff for our proposed reforms to be the centerpiece of her exit strategy is encouraging. It'd give Pamusa access to government evidence on corruption cases on which we can base legal actions in the US pursuant to President Bush's International Initiative to Combat Kleptocracy enforcing the UN Convention Against Corruption (UNCAC) with US laws, particularly in reference to this passage, to wit:

"A critical element in our fight against grand corruption is our effort to deny kleptocrats access to fruits of their corruption. The United States has a wide range of mechanisms to prevent, detect, and prosecute grand corruption, and trace and recover the proceeds of such corruption. We employ the full range of our authorities and tools in a comprehensive, strategic way to target assets misappropriated by current and former senior foreign government or political officials, their close associates and immediate family members, or other politically exposed persons (PEPs) ."

PCGG lamentably has barely touched the surface of the estimated $10 to $15 billion Marcos' and cronies' ill-gotten wealth which surely includes equities in companies the dictator favored. Much has been added to said ill-gotten wealth with billions of dollars more stolen by current and former government officials, their close associates and immediate family members, or private individuals and businessmen that colluded with them during the post-Marcos administrations.

Worse, conspiracies between high-level public officials and businessmen led to outright larceny of government assets including foreign aid and loan funds. The proceeds of corruption have expanded businesses, raised equity to acquire control of publicly-traded corporations, and increased investment overseas by which concerned businessmen have acquired tremendous economic and political powers that suit US prosecution under racketeering statute (RICO) which is often used now against corporate corruption.

Send to fcwenceslao@hotmail.com any information about corruption.

This article is also posted at www.PerryScope.org -- "The globe in perryscope!"

The lawyer for former First Lady Imelda Marcos has accused government lawyers of colluding with lawyers of business tycoon Lucio Tan to dump the government’s P51 billion lawsuit against his assets.

In an ambush interview at the Sandiganbayan, lawyer Robert Sison urged Congress to start an investigation into "irregularities" in the handling of Civil Case No. 0005 by lawyers from the Office of the Solicitor General (OSG) and officials of the Presidential Commission on Good Government (PCGG).

“This is a good opportunity to start a congressional inquiry to determine possible collusion between Lucio Tan and some influential people in government,” he said.

Sison appeared before the Sandiganbayan Fifth Division last Wednesday to plead for the grant of a 10-day travel permit to Mrs. Marcos for her scheduled eye surgery in Singapore.

He expressed puzzlement on the decision of the OSG and the PCGG to remove erswhile government lead counsel Catalino Generillo from CC# 0005 when the latter has been doing a good job.

Generillo earlier succeeded in putting Ilocos Norte Rep. Ferdinand "Bongbong" Marcos on the witness stand and reportedly secured a commitment from Mrs. Marcos to testify next to corroborate her son’s statements.

In his testimony, Bongbong said his father made a diagram showing the extent of their family’s holdings in a number of Tan’s companies including Fortune Tobacco Corp., Asia Brewery, Allied Banking Corp., Foremost Farms, Himmel Industries, Grandspan Development Corp., Silangan Holdings, Dominium Realty and Construction Corp. and Shareholdings Inc.

Mrs. Marcos had earlier made a claim that her late husband owned some 60 percent of Tan’s assets in the said companies.

Sison explained that the Marcos family has been cooperating with Generillo to prove that Tan was simply holding Marcos interests in trust.

“The PCGG will try to prove that the Marcos stake in Tan’s companies was ill-gotten while we will try to convince the court that it was legitimately acquired. That is where we part ways,” he explained.

“I can’t understand why this case seems to have become OSG, Lucio Tan and PCGG vs. Imelda Marcos. Also, why is it that Atty. Generillo who was working earnestly removed at the request of (Lucio Tan’s lawyer) Atty. Mendoza?” he added.

Sison was referring to a November 17, 2008 letter of Mendoza addressed to PCGG Commissioner Narciso Nario questioning the appearance of Generillo as lead counsel in Tan’s case.

Mendoza invoked the Supreme Court pronouncement in the case of Gonzales vs. Chaves that "the Republic and all its instrumentalities, particularly the PCGG, must be represented in all actions by the OSG."

On December 3, 2008, the OSG declared it is taking over the prosecution of all PCGG cases and urged the commission to fire its lawyers.

Last May 21, PCGG Commissioner Ricardo Abcede announced in a press conference that Generillo’s appointment will no longer be renewed.

Five days later, Solicitor General Agnes Devanadera filed a manifestation before the Sandiganbayan Fifth Division saying that Generillo’s deputation as government counsel ended on November 20, 2008 and was not renewed. The OSG likewise served notice that Generillo has no authorization to speak to the media about the details of the case.

The PCGG's and OSG's moves came after Generillo questioned the statement of the government that is is preparing to make a formal offer of exhibits in the case.

He said several issues remain unresolved like his motion to disqualify Mendoza for conflict of interest as a former Solicitor General and the appeal for the admission of the testimony of former Genbank executive Joselito Yujuico.

Generillo also stressed that Tan’s younger brother, Mariano Tanenglian, is serious about testifying for the government case but a formal offer of evidence by the government would effectively bar his testimony.

Sison agreed with Generillo.

“I cannot understand why the court did not rule on the motion for disqualification against Mendoza and why it required the PCGG to file a formal offer of exhibits despite the pendency of the motion for reconsideration on the resolution on the motion to expunge the Yujuico testimony. Hanggang hindi nare-resolve yung mga issue na yun, there should be a suspension of the formal offer,” Sison said.

“If Mariano (Tanenglian) musters enough strength to testify in court, we will turn the tables on them (Tan). If you hear what he has to say, Mrs. Marcos need not even testify anymore. Tanenglian has first-hand knowledge of all transactions between Pres. Marcos and Tan,” he said.

There is so little Philippine investment in New Zealand, or any other kind of economic inter-action, as to be almost invisible. There is, of course, poor old Victor "Vicvic" Villavicencio, whose ownership of the Lyttelton Marina has been one of the great commercial disasters of recent NZ history (a "once in 50 years storm", in October 2000, blew the flimsy thing to pieces and sank nearly every boat "sheltering" within. Lawyers are planning their world trips years in advance in anticipation of the proceeds from the tsunami of litigation that resulted. The storm struck a couple of days after new owners were announced. They quickly voided the sale, which added to the legal mess). Then there’s Eduardo "Danding" Cojuangco, who is a huge name in the Philippines, but unknown here. He has become known for paying record prices for race horses at the annual NZ yearling sales. But that’s about it.

However, our interest was definitely aroused when the Prime Minister, Helen Clark, came to Christchurch, in July 2001, to (among other things) open the Lignus Exchange, an Internet-based lumber and log trading exchange, set up by the McVicar brothers, who are well known in the Christchurch timber industry. It was stated that a Singapore company, Unifize had taken a 20% stake in the Exchange. Right at the end of the Press report (18/7/01; "Asian stake in local Internet timber trader") it was mentioned that Unifize is owned by "Filipino-Chinese billionaire Lucio Tan and family interests".

Lucio Tan is definitely somebody to keep an eye on. He is the Philippines’ richest man and one of the richest in Asia. But it is the way in which he has made his billions that perfectly illustrates the crony capitalism that has plagued the Philippines (and a lot of other Third World countries). About the only remaining "check" on foreign investors coming into New Zealand is that they be of "good character". Tan fails spectacularly.

Top Presidential Crony: Marcos

He comes from poor Chinese immigrant descent (Chinese were not entitled to Filipino citizenship until the 1970s) and started off as a scrap dealer – thus fulfilling the Filipino stereotype of Chinese. As a young man he moved into the tobacco industry, where he first met the young Congressman, Ferdinand Marcos. That was the key. In 1966, when Marcos was President, Tan founded Fortune Tobacco, which is now the country’s biggest tobacco company. It accounts for over half of all cigarettes sold in the Philippines. Fortune took off after Marcos imposed martial law, in 1973, thanks to generous tax and other incentives. In 1977 Tan bought a bankrupt bank from the Government, which is now Allied Bank, one of the country’s top banks. In 1982 he established Asia Brewery, benefiting from a Marcos ruling that allowed new beer companies to open. So he is now the Philippines’ top cigarette and booze baron. Indeed he is known as "Mr Cigarette".

During the long years of the Marcos dictatorship, Lucio Tan was his closest crony. In 1987 (after Marcos’ overthrow by the People Power revolution) Rolando Gapud, Marcos’ financial adviser, swore an affidavit to the Presidential Commission on Good Government: "I know that Mr Marcos and Mr Lucio Tan had an understanding that Mr Marcos owns 60% of Shareholdings Inc, which owns shares in Fortune Tobacco, Asia Brewery, Allied Bank and Foremost Farms…Mr Lucio Tan, apart from the 60% equity of Mr Marcos, has been regularly paying, through Security Bank, 60 to 100 million pesos a year to Mr Marcos, in exchange for privileges and concessions that Mr Marcos has been giving him" (Public Eye, January-March 1999; "Into The Light"; Sheila. S Coronel. Divide the pesos by 50 for a $US approximation).

In 1986, when Marcos was compelled to end martial law and call an election, the workers at Tan’s Fortune Tobacco factory were loaded into "Love Buses" and sent en masse to cheer for Marcos, after which they were paid allowances by the company (of course, Marcos "won" that fraudulent election, and was then overthtrown by the outraged people).

In December 1998 the Philippine Daily Inquirer ran an explosive front page series of articles, in which Wonderwidow and shoe fetishist, Imelda Marcos, opened her books to the paper and detailed just which cronies owned what. Her motive was revenge – she said that the Marcos cronies had been given all sorts of companies and assets by the late Ferdinand, for safekeeping (until things settled down), then refused to give them back to the Marcos family. She claimed, as one PDI headline put it: "We own practically everything" (5/12/98). She reckoned that Marcos, having obtained all sorts of companies by fair means or (very) foul, dished them out to his mates: "I won’t be president of any company because I’m already President of the country" (7/12/98). Tan got 12 companies. All the cronies paid Marcos hundreds of millions of pesos per year into his secret bank accounts, in return for privileges and concessions (Ferdinand used the name "William Saunders" for his hidden accounts and assets; Imelda was "Jane Ryan"). She wasn’t very flattering about Lucio Tan: "…he’s nothing, just somebody who used to buy used bottles" (9/12/98; "Imelda: We made Tan, Cojuangcos").

Top Presidential Crony: Estrada

After Marcos’ downfall, Tan faced a hostile President in Cory Aquino. But he continued to thrive and acquire more major assets. In 1992 he bought the privatised Philippine Airlines Ltd (PAL - known universally as Planes Always Late). He attached himself to the rising star of Senator Joseph Estrada, who went on to become Vice-President under Fidel Ramos, then was elected President, in 1998. Tan was the major financier of his successful Presidential campaign. He became Estrada’s closest crony, regularly being seen with him in public and travelling with him (most unusual for the usually circumspect Filipino-Chinese business class). Estrada looked after his mate – when the tax department charged Fortune Tobacco with P26.5 billion in tax evasion, Tan’s well placed connections throughout the bureaucracy, judiciary and the political system (including the President) ensured that the charges were dropped (the Court of Appeals ruled that the Government had filed its case 11 days too late)

Not only Filipinos hate Lucio Tan, Chinese community also hates him for his bullying actions against Chinese language media. He often threatened to boycott those Chinese newspapers that publishes negative news about him.

He also controlled Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. and influenced their voting of President. Everyone in Chinese community knew, the entire association became his puppet, and the so-called election is nothing but a joke.

Yeah it's sad to see how families fight over wealth. But granting Lucio Tan Sr. is an illegitimate child among the siblings, aren't each one of them be grateful for having been blessed with an adopted brother who had paved the way for the success of their whole family? I think M. Tanenglian and Lucio Tan Sr. should better sit and talk things over...nobody would benefit over this fight except their respective lawyers and this government.

Lucio Tan Jr is the only son by the first wife, but he only know how to play basketball and nothing about business. Biggest bully of them all, i have seen him play at Xavier, kupal talaga and he tells refs na gusto mo bilihin ko buhay mo

WAKE UP LUCIO TAN! many of your executives were multi-millionaires because of kickbacks. have several luxury cars,and sprawling houses how come you go only for your brother mariano? its time for you to audit your treasury department. nandiyan ang baho ng kumpanya mo.

Jealousy, infighting, envy... these all cause others to burn a business empire down to the ground.

Remember, history serves as a lesson... but only when humanity heeds its call.

Why let history repeat itself... be blind and let what you, and your family, your friends have dearly and literally built from the ground up be suddenly destroyed in one instance, with many on the side (the same ones who are causing problems) waiting to get a piece of the pie, or even yet, the whole piece of the pie.